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What does the future hold for Superquinn?

Laura Slattery

The tills have rung for Superquinn, sold to one of its main rivals, Musgrave Group, after the chain was placed in receivership last night. That the company, founded in Dundalk by Feargal Quinn in 1960, has secured a buyer is undeniably positive for both its 2,800 employees and the Irish grocery market alike, especially as Musgrave chief executive Chris Martin cited comforting phrases like “excited by this opportunity” and “supports our growth agenda”.

The Superquinn bakery (still glazes ahead of its competitors) and Superquinn sausages (coveted by generations of emigrants) will remain on sale for now.

But many questions remain. How will the Competition Authority assess the transaction? If the deal goes ahead, Musgrave, which owns Centra and Supervalu, will become the biggest retail group in the country, overtaking Tesco. Musgrave has its strongest presence in Munster, while 16 of Superquinn’s 24 stores are in Dublin. This geographical spread may be enough to assure the authority, and in any case, it will be under severe pressure to prevent retail jobs falling by the wayside.

An outside entrant may have brought more price competition to the market as a whole, but then Superquinn is not Dunnes Stores – it has traditionally branded itself as upmarket, with the prices to match. Competing on price rather than product would change the essence of the brand. Indeed, recent economic times have seen it attempt to chase value-conscious customers in a manner that has perhaps muddied perceptions of its core offering. With its market share slipping to just 6 per cent, it probably felt it didn’t have much choice.

Which way will Musgrave push the company? Can Ireland afford an indigenous Waitrose-type chain, especially with Dublin already well-served by Marks & Spencer and a smattering of quality standalones? The Superquinn name will be retained, but will the stores be developed by Musgraves into quasi-SuperCentras? What does Musgrave mean exactly when it says it will use “its significant brand expertise to develop the Superquinn business by investing in the stores and bringing value to the Superquinn shopper”?

One possible solution to the gap between Superquinn’s old brand identity and the state of the economy would be to rebrand those stores that are located in struggling areas as Supervalus, but keep the Superquinn name above stores located in areas where disposable incomes have held up.

For Irish grocery suppliers, the deal means a further concentration of retailer power and the risk of missed payments for goods already supplied. But it could be worse. Musgraves has committed in its statement this morning “to providing existing Superquinn suppliers with the opportunity to continue to supply Superquinn stores”. Contracts may be renegotiated. But an overseas buyer looking to scale up by expanding in Ireland could have decimated the supplier base altogether.

How much has Musgrave paid the receivers? The only thing we know for sure is that it will be significantly less than the €450 million that Select Retail Holdings, a group backed by property developers, reportedly paid Senator Quinn and his family for the chain in 2005. It is this debt that prompted the receivership, rather than trading difficulties, though trade has been going in reverse of late. As a private company, Superquinn did not disclose its sales or profit figures – the group that it is set to become a part of does, however, and made a pretax profit of €72 million on sales of €4.4 billion last year.

Musgrave, which managed to increase its profits by 3 per cent in 2010 despite a 3 per cent drop in sales, includes “not being greedy” in its list of corporate values. Customers, suppliers and staff of Superquinn will soon find out if this statement holds true.

Not sure I agree with your take. SuperValu stores are for the most part independently owned. If you go to the SuperValu in Clonakilty or Petitts SuperValu in Wexford town, they could teach Superquinn more than a thing or two about quality (cheese options and fish are more limited than some Superquinns).

Some SuperValu stores would comfortably meet and in some cases exceed Superquinn for quality.

I am sure you are right in respect of rebranding some stores e.g. Blanchardstown, Walkinstown or Bray as SuperValus but it wouldn’t surprise me if Musgrave kept the brand as a premium offer to complete their stable which runs from Daybreak branded newsagents with less than 400 skus to large multi-award winning SuperValus like Clonakilty.

As Supervalu and Centra stores are almost all franchised the question remains as to whom Musgrave will sell these stores to down the line as they did with all the Budgens stores in the UK post acquisition. This presumably offers an opportunity to an existing Supervalu retailer in Dublin with very deep pockets. Musgraves may end up holding onto them for longer as anyone trying to raise finance from our zombie banks will have difficulty.

I don’t agree about Supervalu teaching Superquinn a lesson. In Dublin anyway, 2 of the 3 nearest me are scruffy and the Superquinn has a great bakery, salads, umbrellas to borrow, is spotless, has an excellent range of Irish products and veg. Superquinn is a pleasure to visit. Supervalu needs to up there game on shopping experience. Good to hear spanish fruit merchants Dunnes didn’t buy it anyway. – - Buy Irish – -

It seems strange that negotiations took place between the banks, Musgraves and the prospective receivers before the receivers were appointed and that as soon as they were appointed that the sale took place within hours with a statement that the price will settle the debt to the banks but that the property liabilities will remain with Select Retail Holdings.